HP to lay off 27,000, profit slides 31%

Hewlett Packard Co said on Wednesday it would lay off roughly 27,000 employees or about 8 percent of its workforce to jumpstart growth, and its shares rose 11 percent.

The company said the layoffs would be made mainly through early retirement and would generate annual savings of $3 billion to $3.5 billion as it exits fiscal year 2014.

The world's No 1 personal computer maker, which employs more than 300,000 people globally, also said on Wednesday that it had a 30 percent decline in second-quarter profit and a 3 percent decline in revenue in the quarter, compared with a year ago.

Layoffs "adversely impact people's lives, but in this case, they are absolutely critical to the long-term health of the company," Chief Executive Meg Whitman said on a conference call with analysts.

The company will take a pretax charge of $1.7 billion in fiscal 2012 related to the layoffs.

HP has been trying to move past the internal upheaval that marked 2011, including the departure of two chief executives.

Whitman, a veteran Silicon Valley executive who took the top job last September, has been trying to turn around the company.

HP reported second-quarter net income of $1.59 billion, or 80 cents a share, compared with $2.3 billion, or $1.05 a share, a year ago. Revenue of $30.69 billion was down 3 percent compared with the same period last year.

Excluding items, HP said it earned 98 cents a share, compared with analysts' average estimate of 91 cents, according to Thomson Reuters I/B/E/S.

Autonomy Founder Leaves

HP's acquisition of British software company Autonomy for over $11 billion is facing challenges, and results in the division fell short of HP's expectations, Whitman said.

HP has moved the division under its chief strategy officer Bill Veghte, and Autonomy founder Mike Lynch will be leaving the company.

Results from HP's other divisions were also weak.

Sales from the personal systems group, encompassing PCs, were flat with a decline in sales to consumers offsetting revenue from commercial clients.

Revenue from its bread-and-better printing group, which is being merged with the PC group, fell 10 percent after weak consumer and corporate demand.

"We improved the channel inventory to within an acceptable range," Whitman said on the call, referring to the printing group. "However, we continue to face a weak demand environment."

Sales of enterprise servers, storage and networking equipment fell 6 percent.

HP shares rose to $22.35 after hours after closing down 3.2 percent at $21.08.